about the tides rising in the year 2100 now that we're at .04 instead of being at .02 co2. >> thanks for coming in. >> i appreciate it. >> we'll check out your bloomberg terminal. make sure you join us tomorrow. "squawk on the street" starts right now. ♪ ♪ ♪ ♪ yeah, happy birthday to a musical legend once billed as the boy genius. stevie wonder turns 63. >> i saw him play at harvard law school and he came up and said i'm telling you, i have a great experience. i can see. i can see. and he started reading things and he said -- fooled you! fooled all of you! >> good morning, welcome to "squawk on the street," carl quintanilla, jim kraemer and david faber at the nyse. retail sales kicking off the week with a beat. holding back from criticizing

japan's monetary policy. chinaa industrial production also rebounding from last month's seven-month low. >> our road map begins with markets with an unexpected rise in retail sales and a three-week winning streak behind it. >> breach of trust. bloomberg news editor in chief saying the financial news services holding itself responsible after the terminal usage data. jamie dimon signaling if the roles are split he might do the same and leave the bank. michael kores, morgan stanley to the best ideas list. >> the third con skut of week of gains and the dow finishing friday with an all-time closing high, 15,118. and the s&p at 1633. meantime, the first key economic report of the week is out. retail sales for april up unexpectedly by .1 as demand for items like cars offset the

largest decline in gasoline sales since december of '08. we knew gas would take a bite out of this and it didn't seem too hurt too much. >> we're at a weird juncture here. i am being bombarded by smart people, and david, i'm curious to know from salt. guys on the airplane, guys at the meat market yesterday, guys i see in restaurants. this has to end. this is done. this is rolling over. it's finished. how do you find anybody in these anecdotal situations who said to me, you know what? maybe it keeps going higher. not one, not one. >> and is that a positive sign? >> yes. i mean -- a guy i really like stops me yesterday and says, you know it's rolling over. and i'm, like -- i was looking at a friday, nice finish and he goes, come on, you know what it's going do. he leans over to me, is that suddenly, like let me tell you

in private we know what you're thinking. i'm saying, i don't know. like, it should. >> yeah. over the weekend, of course, we have two big things. "barron's" talking with the 50/50 chance of 18,000 and the story from john, hills and rag often the go-to source for the fed when they want to put a story in the paper saying that the fed has a plan to taper. a matter of timing now, but that there's something in the drawer that they can pull out. >> they would expect to have something in the drawer to pull out. >> and the question, of course, is timing which they still don't seem to know based on the story. they're watching what they've told us they're watching and employment numbers and inflation. i always come back to the employment list of what they were shooting for. we are still so far away from that benchmark. a lot of people do talk about something that you put in our head and the disability number. >> i don't want to know. >> something we can't talk

about. >> it's safe for work. >> the legal substance. >> the disability number and it is a fascinating story that has started to get more coverage. of course, we've asked about it on air and not gotten many answers from some of the administration officials. >> it is. there's more people going on disability each month than are getting jobses. >> i. you still have a number and the denominator changes. some people just won't take bernanke at his word. we have said we have to get this employment lower and now we'll put in the plan we just saw and you'll get a retail sales number that will be good and immediately everyone says it's over. it's over. bond buying is over. it's not going to do that. look, what happened in europe when he felt things were getting better? it raised rates twice. how much worse are they doing than we are? >> it does speak to another

piece in the journal is that the next fed chief will have to make the mother of all calls and whoever it is, that's going to be the decision that we'll be talking about most likely five, ten, 15, 20 years from now. at one point you really do reverse. >> what happens if this is going to be total controversy? >> what happens if rates don't go up? >> what if we're japan. that would not be good. >> the pepper conference. >> there was a more positive tone, frankly. >> yeah. >> although again, as i pointed out on air so many times, there are so many hedge funds that focus on credit. different credit product, not just bonds and structured products. i ended up having a lot of conversations which frankly, what we're talking about right now which is perhaps the most important part of the overall picture which is credit. when do rates start to rise, but

many people not believe thatting that is any time soon. >> i wish you'd been able to put more in context, and he backed this view which told you not to worry about it. >> right. >> this is a man who shouted fire in a crowded theater because there was disco inferno. burn, baby burn. >> who runs a credit-related fund who was at merrill lynch and said you don't know what you're talking about and if he had perhaps stayed and been listened to, merrill might be a name today that might be a part of bank of america. and carl tweeted it, as well. 2% is where we get on the ten year. and also interestingly, sees deflation as a result of the yen's continued decline because of what that will mean for prices here. >> i thought that was a compelling logic. i picked up the paper on saturday and, wow! the fed is about to exit.

the market will be down 2,000, and then i read, they actually thought about it and considered policy and -- >> so when these guys met you at the meat market and they said do you know it's rolling over? your response was -- >> you never want to be in a guy's face and say listen, pal, especially the beef tips counter. >> that's the worst place. >> the pulled pork is so gareat at this place. that's not what i see. you are put on the defensive. good guy, good guy, not challenging, this man, but you just then talk about the jgbs. the jgbs and the breakdown. you are talking about a particular kind of bond that would signify the wrong thing. >> there was. listen, japan is vitally important to what is happening in our markets right now. the italian bonds and spanish

bonds and we've said many times the money is the key and that does come up again and again in so many ways that you might think are not necessarily correlated, but in fact are. i'm not going go to the meat house because that's where i will be bought and held by bears. i'll switch my whole schedule around. it would have to be the meat house, right? >> why wouldn't it be? >> that place has killed more steers than a bear market slaughterhouse. if i felt the dead cows and this guy, the whole thesis was just blowing up on me. >> all right. talking about blowing up, the controversy inful voing bloomberg and the word that the company allowed journalists to use some information about the usage of some of the customers. the firm restricted reporter's access last month after goldman sachs complained. in an op ed, bloomberg's editor

in chief said in part, our reporter should not have access to any data considered proprietary. i'm sorry they did. he goes on to say at no time they have access to trading portfolio to other related systems more did they have access. they couldn't see the stories the clients were reading or the securities clients might be looking at. much of the story started on friday, an interesting story in the new york post, a goldman -- bloomberg had inquired of goldman about the employment of one particular person because they noticed a reporter at bloomberg did, that they weren't being active on their machine and that raised red flags and bloomberg brought it -- i'm sorry, bloomberg brought it to his attention and he was talking about the fed and treasury, at least, looking into how their bloomberg mash easterns may have been monitored in any weigh. >> at no time did they have

access to related systems or access to messages? >> i don't. i would like to understand this part more. >> they could see high-level types of user functions on an aggregated basis. is that aggregated as in all customers or the one customer, but all of their information. i don't know the answer to that. >> i was one of the first clients of mr. bloomberg who sold us the terminal, and i would say that i feel like mr. winkler is an incredibly trustworthy man. he apologized, but he said they didn't have access so i'm going to take him at his board. there's no reason for me not to take him at his word. >> the other wrinkle out of the ft is this was something that a reporter mentioned on their network in 2011. the company, bloomberg, realized it was a problem, vowed to resolve it and did nothing until later when goldman came back and complained. so how much of this was already known, acknowledged and yet not addressed? >> i've always felt that they

see everything. look, maybe i'm a bit paranoid. you put it in an e mamail you should expect it to be on the front page. >> or in china. >> i text my kids and i know they know she goes to tulane. they don't know her classes yet, but i refuse to text that. >> she did a good job. >> i do believe in holding ourselves accountable. this is a mea culpa. i believe matt winkler. he's out there telling the story, and i'm going to say that no one is going to cancel their bloomberg term. >> you don't think that will be the case? >> i don't think anyone does, no more than if there was a credible alternative that people can leave bloomberg, i still don't think they would because it is a much loved product with lots of reporters and lots of information. when the mayor comes back --

he's not going to come back. they said he's going to run his foundation and the mayor has become beyond at all proportioned as a result of the success of the company. >> what he put into place here is miraculous. >> i'm just standing by winkler. >> bloomberg, they know when you in in and as an employee and they know when you come in and go to lunch because everything is monitored in terms of that. perhaps it's a good wake-up call for everybody to just be aware and if you're a hedge fund manager you might be aware of other things, as well. >> we'll take our knocks for covering it at all because they're a rival of ours, but we'd do the same if we were anybody else in the business. >> matt winkler says we apologize for our errors. it does not reflect our culture and history. he's not saying we've made no error. what's the deal here? you're making much ado about

nothing. >> incredible success. my lord, how enormous that company. people forget. it is probably the largest technology company in new york city. it is a technology company. journalism came later and it is very important to it, but all of this began in the early days and i remember when they started the news service because the reporters would go on client have saids and say what are you interested in so they could understand what to cover and it kind of came out of that. it's still a data company and it's an incredible technology company. >> that's great. i remember they went to data general because data general had the more robust difbsk drives i the '08s. they have a technology department, the actual people who created it and are the envy, other than nasa, maybe nasa could use them, right? potentially they could. it's been an incredible as we said, success story and the mayor himself is the richest man in town, with a their 25 billion net worth. they bought back that stake with

merrill lynch during a crisis at a very advantaged time. >> but carl's right. they're competitors and we're a news-gathering organization. >> our audience uses their product, but their audience watches us so, i mean -- right, but i don't know -- i can't tell who is not working at goldman sachs. >> no. you don't have that access. >> no, i don't. >> what if someone hasn't been showing up enough. maybe. >> exactly. >> when we come back, morgan stanley adding a retailer to the best ideas list. plus google trading at all-time highs, but as the internet giant spreads its wings are there aspects of its business that make it vulnerable. take one more look at its futures and we'll talk about what jamie dimon does if this vote next tuesday does not go his way.

futures open down 30. a lot more on "squawk on the street" in just a moment. [ wind howling ] [ engine revving ] ♪ [ electricity crackling ] [ engine revving ] [ electricity crackling ] ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way

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i saw the trend -- i remember it.

-- that's why we know "burn, baby, burn" disco inferno. >> it is what it is. you say it here and it comes out there and that's the beautiful thing about that control room. j.p. morgan chairman and ceo jamie dimon has said he may consider leaving the bank if shareholders vote to split his duties next week, that's according to the journal. he made the comment at a meeting with investors last week. they will vote next tuesday to separate the chairman and ceo roles and sort of fits, david that hen you've been he was he was threatening to leave and anecdotally it was expressed by people who know jamie and i have not called them as i should have that he was visibly angered by this and upset and so, you know, maybe it's a real threat. i don't know how it influences anybody in terms of the way they might choose to go about doing

what is a non-binding proposal, let's not forget, so it doesn't mean it has to happen. >> i thought seinfeld made a lot of good points. >> the one thing that bothers me about the critics, there are two people who are unassailable among ceos and one of them is dave cote who was criticized of not having the analytical ability. he's my neighbor. the man is a wiz. about risk, he knows more about risk and how to be able to do short term. remember, you don't necessarily -- you have to give credit to some of the things honeywell does and then let's talk about lee raymond. is there anyone who is behold tone no one in this world like lee raymond. one of the richest, toughest people and i've not been a fan of a lot of things exxon has done, but boy am i a fan of their integrity. if lee raymond is the lead director. is there anyone who can challenge the ceo with such

impugnity and without worry? >> we'll talk about the policy officer from glass lewis later in the show and one of the big advisory firms. let's say, though, jim, that it does pass. what is a reasonable response? do they start a succession plan with a split role? >> i guess so. i mean, it's non-binding. >> it's non-binding. >> you don't like to go against these agencies, but i question the agencies. i'm putting it right in the face of the agencies. what level of homework did you do? do you know what dave cote has done? >> it's know as though they haven't gone through a very rough time lately and the london whale and a number of other things occurring there. >> do you think he had to include himself? >> i don't necessarily believe that, but it has been a rougher road for jpm. >> but i think he talked aggressive action. i still believe -- >> one of the things we know about this business -- >> you can be in a job for a

long time. >> right. >> we do know this is a failure to supervise by someone. you can't gain fraud. i have learn individual my career, there are people who can commit fraud and you do not know it, and you have to pay for it? may i just say he's the best in the business and that would be a shame, and i've been critical of him with the whale, but he is the best in the business and i don't think any of us will disagree with that. >> yeah. cramer's about to put monday under the microscope. we'll get "the mad dash" after the break and one more look at futures as we keck off the first opening bell of the week. more "squawk on the street" live from the nyse straight ahead. are you still sleeping? just wanted to check and make sure that we were on schedule.

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time for "the mad dash," six minutes before the opening bell. we have a big monday of trading ahead of us including the entire week. michael kors. >> cynthia would not be wearing a michael kors bag. this is the fancy, expensive bag. there was a fancy, expensive secondary that crushed this stock and then it fell down with coach, and then the next thing you know, people feel lux row goods aren't selling that well, and wow! i think this stock has been able to break down ask it spent time in the vineyards. starbucks is expensive and people are spending money at starbucks. whole foods are expensive and

people will be buying michael kors. when i'm at the outlet with my daughter i blanche at the prices. >> $270? >> let's quickly go to fairway. ipos have been success frl. exits from private equity and people have been happy to buy companies. >> these guys aren't doing that well and the store was shut down because of the hurricane and yet everyone loves this. this is getting the halo of whole foods and you've got buy, buy, buy, buy. even though the balance sheet seems stressed, but people love this, and david, it is true. you have one near you. you know people have met each other in fairway aisles and gotten married there. they are feeling the honey dew melons and then honey dew this. they've also come to blows particularly you're the 80-year-old. you want to watch out for the above 80-year-old women.

they are really tough, they will take you out. >> you will hear from -- public enemy number one. >> it's war in fairway. certainly the one on 74th. >> when you're trying to get those $17 shirts. holy cow! that's a tug-of-war. >> we have four minutes before the opening bell. will we get an encore of the record-setting week last week? the opening bell just minutes away. changing the world is exhausting business.

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and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. you're watching cnbc's "squawk on the street" on a monday, live from the nyse. a lot going on. the president speaking this morning at 11:15 with british prime minister cameron. we have the irs story which continues to get headway today. retail sales were okay as we know and nothing dramatic out of the communique which has the yen fall even farther today. >> one of my late 14s was targeted by the irs. that was the beginning of when you realized how dirty nixon really was. it was just a horrendous.

enwhether the press could have been accountable. >> one reporter fromhe. and one reporter from the british side will get a question and we'll see if it hits that way, here is the q and a and the s&p 500. textainer, and the analyst meeting and over at the nasdaq, western life insurance company headquartered in austin, texas. we have an interesting note out of morgan stanley today. michael kors being added to their best idea list. >> it is so weather-related. pvh has come back strong from what was considered to be a disappointing quarter. underarmour is braking out and lululemon, a total battle ground stock and that's done well. if it's expensive it's working.

>> what does that mean? >> not the stock. >> you're not talking multiple here. you're talking price of goods, let's just be clear. >> all of this comes back to the strong retail sales number. everything that i hear when you talk to a bank executive, what they'll tell you is we listen up on mortgage. when more people buy homes -- if you take a look at the stock of williams sonoma. this thing is a rocket ship. i regard that as the quint essential housing play because most of the things there cost far more than you can get anywhere else. it gapped up. when i was going over the charts they gapped up and they never filled the gap. it's such a bullish thing. >> interesting. the journal has a piece today about how it's really becoming the economy's turn to take leadership from the market, right? >> yes. it's time for some of the data points to catch up. at the same time "usa today,"

another story about margin debt. >> i know. we saw the story the other day. >> the margin debt stories they always come and they never mean anything. >> there are only once that i saw it in 2001, steve galbraith and before we went to the buy side had done a remarkable piece about morgan stanley about the high nature of the margin debt nasdaq, and that was, you know -- that was a sign. that was pretty good. >> i shouldn't put such a broad, but it's been 13 years. >> it is the lead financial story in one of the biggest papers in the country. it will feed sentiment, right or wrong, right? >> what was that, david, that involved may -- may flowers, april flowers, go away. >> yes, the go away. >> let me tell you what happens if you went away. you are so far behind the market you will never catch up. come back to work in may and try

to keep my firm, there you go. that's what i'm hearing. it will be memorial day for the hedge funds that took may off. >> the tomb of the unknown portfolio manager. >> it is amazing how long they lag the broader market and still don't see asset outflows. >> they get to see, what? cirque du soleil out there? what do they do? >> i would like to hang with al pacino. i don't know whether that made me a lot of money. did al pacino put me on michael kors today? >> no, he didn't. >> did al pacino have a short lawn? >> no, but he was very entertaining. >> he was. that's what it's about. i had a feeling it was about performance. >> he had a lovely girlfriend. >> it's like a flame throw to this place. i continue to come back to this notion that it matters how you do. i am so quaint. i feel like i'm an old dog. i don't know how to speak emoji. i know emoji? do you know, emoji?

>> i don't, actually. >>, but they went out there and had a great time last week and raised a lot of money. in the meantime the market went up, but it doesn't matter, right? >> is that a distraction? >> yes. >> one thing that's not up is yum today expectation sales came up for april, the stock's down 2%. they blame avian flu there, jim. nothing new, right some? >> i have to tell you something, i was at the world war ii museum in new orleans and there was a boeing. just being and it had a b-17 flying fortress and everyone wrote off boeing and there's mcnerney giving a speech on one of the most impressive, moving displays of what won world war ii. people who bet against boeing should go to that museum. people who bet yum should read

the autobiography. >> interesting. there's boeing who has added more to the dow since the lows than any other component. >> believe it or not. >> engineering company. >> this morning some people voting with or going with michael omen over at jcp, that stock up another 6%. >> yes, he had a good day saturday. >> maybe. it's a volatile stock, as we all know. balance sheet and concerns at least for now behind it. now it's just -- we had a long discussion about this last week, about that stock is moving sharply higher. >> retail sales, there is a rising tide that has everything, but the titanic. the titanic was want really void by the expert situation. >> omen's a loved figure. >> is he loved? >> yes. >> is he beloved or just loved. >> loved. he once called me and said i didn't hear his -- they didn't have what i saw at jc penney and

he was right there. i don't think he called every customer. he didn't call me. i like mike! >> it rings the bell. >> remember mike and ikes? >> yes. >> was mike and ike, they parted and you were never in the dollar tree with me, the candy aisle of the stars. i was eating some runts last night that i got there for a smacker. whoa! >> david -- i can't even keep up with the whole -- >> you have the story, david, the special committee with icahn today. >> we'll keep an eye on it, the special committee is a relatively long checklist of things as they continue to do their work on whether the recap plan put forward by southeastern asset management and carl icahn last week would or could lead to a higher offer or be considered to be a superior proposal that

they've accepted from michael dell and silver lake in partnership. there's a look at dell shares trading below the 13.65 deals and we know blackstone holdout because of concern about the pc market when you hear about southeastern and carl icahn speak as he did on "fast money" on friday and it's all about the acquisitions that have been made outside of the pc business and what will be the realization of those values and deals itself. we shall see what happens here. my expectation, jim, is you're not going to see them anoint this better bid. the special committee has considered leveraging up the balance sheet and didn't want to do it for a base, and it's a public lbo. >> am i too skeptical, with with best buy. and it stopped at 25. could dell on its own volition go higher given the industry is so challenged and dell's so

challenged. >> it could. it could also go to eight. >> we're going to get earnings from dell in a week with or so. i think it's the 21st, the company reports and i don't know what they are, but keep an eye on margins and they're in such a price war with the like of lenovo at 2%. it's hard. and they were part of the overall business. >> let me understand the other part of the business. they have the double bhamy and they're very levered to government spending and there's an article about how the military has cut back quickly. those are two very bad stool legs. i keep saying this is the tribune deal, right when it's happening and we're watching it. the only thing they haven't done yet is to get the rank and file to put money into the deal. the esop, and the tribune, and geffen wanted to pay their 2

billion for the lchl a. toils, that would have been sold to you, and kors is busy treeing to sell noorps for's fraction of that fb which has come out of bankruptcy. marx office this morning -- oak tree is the biggest holder of tribune. you clean the debt up and they'll start all over again, it is so hard to make money. >> when you give thing away the advertising -- i'm not being facetious here. the advertising does make up because this is the penney's issue and only google is suck the worth out of everyone. google makes money on everything. mary thompson is watching what's happening. good morning, mary. >> the dow, s&p, nasdaq all under pressure and off their lows in early trade. pretty much broad-based decline, utilities and materials among the biggest losers of the

sectors that we watch. we are seeing a little bit of strength in the reits and a negative tone to the start of the day. traders saying what's ahead this week? will the traders begin their record run and that depends on the record data and we'll get data on housing and the ppi and industrial production and those are some of the things that traders will be watching this week. also whether or not there's any additional reporting and whether the fed is mapping a strategy to exit qe3. of course, today, the data that investors were focusing on and the industrial data slightly weaker than expected and retail sales in the u.s. are better than expected and that's not doing too much for the retail index and slightly lower off its lows in early trading today. a couple of stocks that you're watching today and the anglo gold coming out and reporting weaker than expected process on a year over year basis and nevertheless, the company says it is considering some options in order to boost its

profitability. something ahead of commodities and credit suisse over in asia is urging others to do in large part because of the declining price of gold, i should say and also the lower production that a lot of the gold miners are experiencing right now and they need to focus cutting costs and you can see it's under pressure and that is putting pressure on some of the rivals like newmont mining and they're weak or today's session. >> in what is becoming a very, very interesting proxy season, this dump's chairman is the latest to say he will step down because he is getting pressure from an activist investor. michael toutlet says that if he is reelected he will step down by the end of -- or by the following year's annual meeting. he's come under pressure from carl icahn who wants him out in large part because he is concerned about the capital and icahn asking for transocean to pay a special $4 dividend and its stock is slightly lower

today and again, another example of what's been an interesting proxy season because of investors pressure. jim, become to you. >> it hides in the dollar, and the cme group in chicago. go ahead, week. >> lots of strange news this weekend, jim. if we look at the ten-year you can see we're hovering in the 90s and we are continually getting higher yields, if you were to look at a price chart of futures or cash you would see lower prices. so that at least from a technical vantage point is making many think 2% is not out of the range. if we look at the nikkei and after the g-7 and after this notion that we have an opinion about what quantitative easing is and does ask it certainly seems like there's a tolerant feeling as to weakening one's currencies and what that can evoke on the export market, but

as you look at the nikkei, we can clearly see from the first chart that these levels are very aggressive, especially since friday when we saw the currency just wildly go through a thursday and go through 100. if you open the chart to '08 you can see it was october '08 sense we were at the nikkei manor. >> whether it was many at the salt conference. when it comes to monitoring the barometer of world anxiety, the jgb chart seems to be the epicenter from what i've heard based on those groups, and if you can look at the currency, you can see at the next two charts in a level that we haven't seen for many years and when you continue to monitor what is going on with this currency, i guess the most important aspect is we're approaching 80 basis points and that's a lot, considering at one

point right around april it was hovering on an intraday basis, so monitor that. jim, back to you. >> thanks a lot, rick. energy and metals is at the nymex. >> we are seeing weakness in energy and metals right now. keep in mind that we are looking at a weaker demand picture for oil and that is what traders are focused on and they're looking at the latest data in china pointing to the fact that demand fell to an eight-month low and that comes on the heels of a new report from opec suggesting that product has risen and supplies have risen as well and that is why we have brent crude prices below $103 a barrel and wti barely hovering around the $95 mark and in terms of the gold price and weakness in gold right now near a two-week low and gold prices are suffering with the fact that they looked at the retail sales data and that was better than expected and so that is something that has zapped some of the enthusiasm for gold

and keep in mind we have seen weakness and there seems to be bearish sent imin the bear market. when you look at the commitment from the cftc you will look in terms of the bearish momentum we will see hedge funds by 6% in the past week and there's some bearish sentiment in that marketplace and we'll see whether gold can stay above the 14.25 level. back to you. >> thank you very much, sharon epperson. >> i did want to get to a complex deal involving companies that are of interest. remember it elan had an enormous amount of cash. it it is similar to a company trying to buy it, royalty pharma. in fact, it did a very large deal in which elan is paying for a portfolio of drugs owned by a

company called theravance and the key one was just approved on friday and it is the next generation of advair. it's one of the best-selling pulmonary drugs from glaxo, partnered with theravance on it and that's the key here. it just got approved on friday. theravance gets 15% on glaxo and other drugs, as well. below $3 billion and 5% above that in terms of royalty. so elan is now getting 21% of that royalty for a drug that, by the way, has yet to begin selling again and it just got approved, but expectations are that over time it will sell an awful lot given that it was ten years of a clinical trial versus twice a day for advair. as for e olan and what happens there. you see it there up sharply. values at 4.8 billion and that

is all of those companies paying 21% and we keep saying companies and all of those drugs and they're paying 21% for that overall group -- 21% of the royalties from those group of drugs. theravance and the cash flows are 21% is about $710 million. what's interesting here, jim, is not just elan's position to turn this route with the pharma bid at $11.50 a share, but what it says about theablist these drugs to replace the drug that was in place being advair, but an deal in which it was advanced. >> do you think they're being happy? do you remember the deal with alchemes. it's like there was a corporate finance firm. is it just in their culture? >> they have made a clear

decision to go this route of being a company that is going to buy parts of the royalty streams of promising drugs and then return much of the capital to its shareholders. >> right. >> they have this tax-advantaged situation given they're an irish company. it will be interesting to watch as they move on. >> they took the billion dollars to buy back stork. >> that's right. >> and people are seaing it they're doing it at a high valuation so you see e i lan shares and th earning ravance into the royalty stream and into the early pipeline drugs. >> i don't know. whoever comes up with these ideas, no one can really understand that them. >> that means i didn't do a good enough job of explaining it. >> i'm just saying, it is not complicated. we have no mergers, what do you want from me. the president and david cameron

set to hold a news conference in an hour and a half. we'll bring you a live coverage from the rose garden. splitting the ceo roles and if that happens, will jamie dimon split from the company? the policy officer will tell us yet proxy advisory firm is calling for jpm to install an independent chairman. [ malenn ve seeincr edib thing otherworldlyhings. but ere are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel,

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>> time for "six in 60," six stocks in 60 seconds with jim. scripps. >> they r reduced uncertainties. >> jefferies downgrades autozone. >> this is a bad call. auto zone is a bad stock. this is a great opportunity and they keep buying back stock. they have a good business. >> you say the squeeze on tesla. it's extended the solar city. i would love to hear what david said and there must be short people for tesla out in nevada. this is a devastating short for some funds. >> morgan stanley on glow worm. >> this stock has languished. the gorilla class market is working for them. >> google has quietly moved up

and this was an opportunity to take advantage of it. bank of america raising the price target. >> this is contrary to what we heard last week. we had people saying chipotle would miss the number and better scenarios for food. >> how about tonight? >> there is a bull mark in theme parks like you would not believe and we have cedar fair which has a great yield and they've done well. >> seaworld came public and that was up 30%. i know we work for comcast. universal has been a home run. i don't know, you worked at disneyland. >> a very long time ago. >> how loved are these parks? >> people, i mean, there are some cases where they have kids and they're frustrated, but in general, they're having the time of their lives and that's why they go. >> when my sister was 28 and i was 25 my folks took us to disney world, i mean, i've been there many times. it's not just for young kids is what i'm saying.

>> we'll see you tonight, man. >> thank you so much, buddy. >> more coming up after the break. don't go away. all stations come over to mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers.

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>> >> welcome back to "squawk on the street." march business inventories

unchanged on the month. expectations for foreign increase of .2 to .3, last month ate .1 increase was revised to unchanged as well and this is important because, of course, march will be the revision we get at the end of the month and it's included in first quarter so we may see adjustments there. this morning's retail sales is fueling a potential slight upgrade by some on second quarter gdp, but i do like to talk about retail on a non-seasonally adjusted basis of 416.5 billion and that was less than $427 billion last month and much lower than the recent record high of the end of december which was $468 billion. so maybe tax day is exaggerated a bit if you look at nonseasonally adjusted or the negative impact that you somewhat missed looking at the more smooth, seasonally adjusted data. carl, back to you. >> rick santelli.

quick market reaction. the dow's struggling to get out of the gate today. down 60 points. gm, alcoa, ge, dupont, cat. take a look at the s&p, up six points in the nasdaq and it's up about 8. we'll start with the con tro verse privacy breach involving bloomberg reporters. we're covering all of the fallout from washington to the trading floor. if j.p. morgan splits its roles will jamie dimon split from the bank. the chief policy officer will be here to tell us why the proxy firm will be calling for the bank to split dimon's job. you have to see what netflix is doing today. the surge will not stop. it is the top performer of the year and a gain of 130%, but has the stock come too far, too fast? a bull/bear debate is coming up. the bloomberg data terminals has its reporters and wall street buzzing for us.

kayla tausche has more for us. >> it's developing by the minute. i want to start with a statement we are just getting in to cnbc. it takes the protection of confidentiality in theiousage of data products by ecb management and staff very seriously. ecbg on to say our experts are in close contact with bloomberg and that's the latest into cnbc right now. let's tell you about how this happened. the terminal is just a machine and chock full of all of the systems a wall street trader or banker would ever need and every economic chart and database of news and economic data. it really is just this treasure trove and the access doesn't come cheap. the subscribers to the more than terminals on lease comes at roughly $20,000 a year. what those subscribers didn't know is that bloomberg's journalists were using the user data to report on them. a user's log-in data and how they've been using the database and any transcripts of

discussions. it is a treasure trove for journalists, but matt winkler says nothing proprietary from customers is something that reporters have ever seen like, for instance, quote, trading, portfolio, monitor or blotter or other related systems nor do they have access to client's messages to one another. they couldn't see the stories clients were reading or the securities clients might be looking at. the question remains who being see those things. bloomberg trade book is registered that allowed the placement of billions of dollars a day, if the fact database was ever compromise. for now wall street says the machine is too indispensable not to use, but the decades-old practice is simply unsettling. guys, back to you. >> thank you very much, kayla. a lot of reaction coming through as we work our way through exactly what we work for now. for more on the fallout from the bloomberg breach, let's bring in tony fratto, former white house press secretary and the cnbc contributor. he's currently managing director

and with hamilton place strategies. good morning, what do you make of what we know so far. >> i'll tell you as someone who was in the seat in government. before the white house, the treasury department where i had a bloomberg screen and dealt with this very often. it is troubling from's journalistic ethics standpoint and it's funny listening to some of the people on wall street talk about this in a way that they seem to be somewhat more comfortable with the blurring of the lines. from the journalistic aspect of this and being in government and to know that bloomberg reporters would know when donald cohn and a handful of fed officials would get on their bloomberg screens on a sunday night that that doesn't cross a line. i think it does, and that's going to be something that bloomberg will have to deal for some time to come for their news division and unfortunately for excellent reporters also. >> yeah. the statement that we have from

the editor in chief says our reporters should not have had any data considered proprietary. we immediately changed our policies so that reporters now have no greater access to information than our customers have. the truth is, tony, that there are a lot of other people in bloomberg be that with sales and policy. the guy sitting at the top of the organization that can see a huge array of inside information and we're not clear at this stage. can they see, for example, what the trades are? that's a very important open question. >> you're absolutely right. >> it's not clear, and i don't think it's going to end with, you know, with an op ed from winkler on this, right? there are too many questions on this. i was talking about the journalistic side of it and the government side of it, but obviously on the business side there are huge questions about what they were doing with this information and whether customers and klein clients kne this information was available

and what would be done with it and i think there one third-party forensic work to find out how to overcome this. the other problem on the news side, if you know bloomberg, you know there's a lot of control in that organization. you know that editors know even when reporters are sitting at their desk. so if they wanted to turn off this function they could have done it a long time ago. i think it would have been fairly easy to do. so that's something that the editors will have to answer to, also. they can turn their funks on and off all of the time and they do it for customers and they'll fix the functions. >> in the meantime, how do you clear the debt and if you were called in and said look, what would you do here? what would you advise? how would you have seen to have cleared the debts. self-regulating isn't going to scomboshg you'll need some kind

of outside work and for somebody to do some forensic work and come clean and transparent on this. awes, you need to talk about the arc ask access ability of these and you can't talk about how it was used in months or years. i think we all knew that back in the early days of bloomberg and back when they were building this news organization on top of a data business that there were a lot of lines being crossed and reporters had access to certain kinds of information and reporters knew this and, you know, they knew this happened in the past and no one knew that it happened recently and the available of different kinds of information changed over time. they'll have to come forward and talk about how that changed and how policy changed and what it is now and forever going forward. the problem with these reporters now is every time they break a story. when i was at treasury it seemed to me that bloomberg reporters always knew when we were going to nominate someone to a high-level treasury position. i don't know if it had anything

to do with bloomberg's screens or not or very good reporting or whatever it was, but those questions are in everyone's minds now for every bloomberg reporter. so they need to be really, really transparent on the arc of the story and what the policy is going forward and how they can red flag the use of any unusual information on the news division. >> can i come back to that comment then, tony? when you were at treasury and they would break a story like that, when people say how did they do? do they ever question it? >> it drove me crazy, honestly. i used to think that maybe there was a leak at -- someone that somewhere in the vetting process because i think all of your reporters know this and i know probably a lot of heads nodding in places leak reuters and others where they were chasing bloomberg on the nomination stories and i am not saying it had anything to do with screens. i don't know how it could possibly have anything to do with screens.

>> no, they have a lot of very good reporters as well. we're all wondering if they had some sort of unfair advantage. how did they break that story and how did they get that information and that's unfortunate. >> we do know if you click on the price of a security several times then there's a pop-up from the service center saying would you like help with this and other services from bloomberg. i'm assuming e ing iing ie ingi name several times, that would be a reasonable thing that happened? >> i don't know that for a fact. i had a bloomberg screen, and i used it and kayla was talking earlier today. government official his to often use the help desk. i was one of those guys trying to use the help desk trying to get help on my bloomberg terminal because it's not intuitive and if you're not using it all day long every day

and it's possible to know that that's in fact, true and that's a question that bloomberg will have to answer on those things. if bloomberg called jpm and said we noticed that bruno will not be using his terminal for a couple of days and has he already been fired and that crosses a journalistic ethics line and i don't think there's any question about that and it's not common, public information. >> we also don't know that that call was ever made, right? >> let's be careful about that, right? that's what a judge would certainly call circumstantial trying to connect those two things. yes, no doubt. we're not talking about a legal issue. we're talking about journalistic ethics, right? it's a different standard for the news business, and every reporter knows that that there are different -- there are different journalistic ethics standards that are very different from legal standards and business ethics standards. they're different.

>> in fairness to the organization they said they had to close that down, that option at least a month ago. certainly there are a lot of questions. tony, thank you for your time. tony fratto joining us on bloomberg. >> the heat is on jamie dimon on whether or not to separate his chairman and ceo roles. up next, we'll talk to someone who wants the j.p. morgan chairman and ceo position split up and he will explain why. plus, in a market that closes at new all-time highs one day and slides back below those highs the next, is stock picking still the best way to go? a few ideas on what's working when we come back. niversity would give me the skills that i needed to make one of those tech jobs mine. we teach cutting-edge engineering technology, computer information systems, networking and communications management -- the things that our students need to know in the world today. our country needs more college grads to help fill all the open technology jobs. to help meet that need, here at devry university, we're offering $4 million dollars in tech scholarships

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j.p. morgan shareholder meeting is a week from tomorrow. the big topic to be addressed is whether the the firm should split jamie dimon's chairman and ceo role. many ceos on this network came out in support of dimon's dual role. >> i think jamie dimon is a world-class executive and has done a fabulous job at j.p. morgan. >> you think he should maintain the chairman and ceo. >> i think it's fine that he does. sure. >> so you're onboard, not only as an outside observer at j.p. morgan. >> it's important to note on the j.p. morgan issue. >> we believe that there is a role for a com benation, and we searched high and low for however much time you wanted to and you landed on jamie dimon, you would do anything to have

him take care of your -- let's call it banking enterprise. >> that's barry diller, of course. after a long line you heard prominent ceos. glass lewis, the proxy advisory firm says the chairman and ceo role should be split. robert mccormack is the policy officer. why double it should be split? >> a little bit is theoretical. what is the role of the board? are they a strategic adviser and should be closely aligned with him or do they play a role in effect being some sort of a combination of both. in particular where you see a huge blowup in the risk controls it really goes to is there room for improve am in the risk control capacity at the company and that really starts with the board and having an independent board leadership can score the independent potential oversight if necessary. >> is it glass lewis' general

belief when these things come up that the chairman and ceo role should typically be split? >> we have generally supported the split of these two roles and as the shareholder representatives having the head of the board that's responsible for that and also be the head of the executive team who is being overseen is almost an insurmountable conflict in terms of how do you see yourself, basically. >> i would have a huge amount of sympathy for you if i thought that was the basis of the debate that we're having around the united states at the moment, but i'm not actually sure that it is at that theoretical level. not everybody is running with it and applying it across a number of companies. more than that, i spoke to a senior banker over the weekend who used to work with jamie dimon and he said as far as most people in the industry are concerned it is personal. it's about punishing jamie dimon because he took his eye off the ball with the london whale, but because people like to see a successful man fail. if that is true, and i'm not saying it is, but if there is

spite in this debate and that is why this is gaining traction then there are people who would think that perhaps in this country in particular they should move away and not support the argument that's going forward. would you have sympathy for that view? >> i think that's a narrow minority point of view. these get 30% to 40%, and it's rarely about the person. it's much more about the structure and the risk eversight. and that's what most shareholders focus on. while there may be people that have personal gripes against mr. dimon, we certainly don't and i don't understand that position and it's more of a structural risk control prof lactic part of the board in terms of separating these two powers. >> it does highlight if he will split because he might see it as a personal slight. that may be how it's playing out within the organization to my

point. >> i suppose it's possible, but, you know, if they robust engagement with the shareholders asking them what do they really want? then you will learn very quick low that many shareholders would want jamie dimon, and the shareholders are looking for is to separate these two roles and have an independent leader on that board who can provide some of that oversight and to help mr. dimon. >> robert, is there any data at this point in terms of the performance of companies that have the split role versus those that don't? >> the data is quite mixed. having these two roles helps companies and other data shows the opposite so you do fall back on some of the philosophical aspects of the board and that's why i start off with the framework of what is the role of the board. most people would say if you have an alternate structure such as lead director in the form of lee raymond and the company seems to be performing well and the risk oversight seems to be

working well, then maybe there's less need for this and where you see the evidence in the $6 billion loss and that's where people may have given more benefit of the doubt. >> directors would never be in a position to have been able to stop the london whale. >> that's completely outside of the realm of any director's ability, isn't it? >> well, it really goes on what sort of structure and risk controls they had in place and the fact that they had to completely change their entire chief investment officer personnel and the reporting indicates there were significant changes that either should have been made or now were made and those sound like very positive changes and that should be led by the board in terms of risk controls. obviously the risk control officers would go to the board and what is the risk exposure to the company, but that goes both to structure and oversight. now they're not going to be evaluate every sort of risk at the company. that is impossible for any

board, right? but there should be significant controls in place and reporting that the board has an idea of what those structures are and should be in a position to revamp those if necessary. >> robert, we'll leave it there. appreciate your time. >> thank you very much. >> robert mccormack from glass lewis. >> we have breaking news on monsanto. hampton pearson has more on that. >> a big win for monsanto at the united states supreme court with huge implications for patent protection especially in the bio technology industry. the supreme court has unanimously ruled in monsanto's favor in its claim that an indiana farmer's vilitied the company's patents on soybean seeds resistant to its weed killer. the justices rejected the farmer's argument that the cheap soybeans he bought from a grain elevator are not covered even though most of them were genetically modified to resist the company's round-up herbicide. justice elena kagan speaking for

the unanimous court sayinga i farmer who buys patented seeds must have the patent holder's division. it's protecting its investment that prohibits farmers from saving or reusing the seeds once the crop is grown. farmers must buy new seeds every year. big win for monsanto. huge implications for a bio technology when it comes to patent protection going forward. >> back to you. >> pretty interesting case, thank a lot, hampton pearson in washington. >> there is no stopping netflix. the top-performing stock in the s&p this year and you can explore how to play this rally, as well. >> the president will give a news conference with david cameron and we'll bring it to you live as soon as it begins. farmers presents: 15 seconds of smart.

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i want to take a close look at netflix, clocking in as the best-performing stock in the s&p so far this year. shares up more than 140% year to date, up another 4% today. is there more room to go or is the rally on the verge of coming to an end. michael pactor is an analyst and has an underperform on the stock and a $64 target and a buy and a

$3.25 target. let me begin with you. searching for news as to why it might be up today. anything that you see? nothing that i've seen specifically today. our thesis on netflix and why we have a $325 price target is this company is a television network company ask if you believe that their margins are going way up over the balance of this decade. the earnings per share have been going way up and what's been happening this year and partly today is the market is beginning to understand that. i understand this is a company that will look more like hbo by the end of this decade than by a low margin video company than it has historically. i think you can still buy into it. >> i heard someone say during the last earnings that netflix became hbo quicker than hbo was able to become netflix. $325 seems a bit extended. >> if you believe that these guys are a network company you can value it like that.

so we think we will put up $1.50 in eps accretion per year over the balance of the decade and that type of margin expansion is for a revenue multiple and these guys are trading at 2.9 times forward revenues and they're trading 3.5 to six times. international at a fraction of that to get to 325. >> michael, $65. we all remember quickster and how much pain was involved there. once bitten and twice shy with you. how do you hold on to 65? i can come up with a bunch of different ways. my sum of the parts gets me there and it's one times revenue. i think with barton and the investing public seemed to misunderstand is that profit is calculated by taking revenue, minus expense. we know expenses are going up. the rumor, i got this from cnbc.com today is that netflix is about to announce that they signed disney television content

internationally and expenses are going up for sure and the market seems to be taking that leap of faith that once expenses go up revenues will necessarily follow. the fact is these guys don't control their expense structure at all. the content owners want more money and netflix's only recourse will be to raise prices. when they do that their growth is going to slow. so i think it's a profitable slow growth company that's worth about one times revenue or an unprofitable high growth company that's worth less. i don't see how you get them both. >> as they produce more of their own content it does get less expensive to air programming and also the notion that they're pricing relative to what cable companies charge is relatively tame and a lot of elasticity among consumers. >> carl, they don't produce their own content. someone else produces content. netflix buys exclusive rights for a very limited period of time and netflix doesn't own the content again. that's not the same as the hbo model who does produce its own content and owns it.

they are nothing like hbo. i know they've characterized themselves as being like hbo. they're not. they have a three-year window to show house of cards. after that, nothing. they don't own it. they can't exploit it further unless they pay more. that's not ownership of content. >> i asked barton that would let him to 325. 65 is what's your metric? i have a sum of the parts and i think people disdown, and overvalue the domestic streaming business and they discount the pack that the domestic dvd business is all of their real profits and that's going away. so people are giving them way too much credit and it will decline to zero. >> not too many stocks that we see such a disparity in the targets between you two guys. barton, michael, thanks so much. pleasure. >> coming up on the program, we've got new details on the irs targeting conservative tea party groups. plus, is the irs targeting another group now, as well?

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a little a little more than an hour into trading. 7:32 on the west coast, 10:32 on the eastest on. yum brand, the parent of kfc, pizza hut and taco bell says sales in china fell an estimated 29% last month. home depot and starbucks among the starks rising to new all-time highs and business inventories coming in flat to march for a second consecutive month. >> as we've been telling you all morning, a privacy reach involving bloomberg data terminals has the company trying to explain itself even as we speak to clients including government officials and indeed central bankers and cnbc's steve liesesman has more. >> simon, thank you. there are at least three significant dimensions we're following on the story when it comes to use of individual information on the bloomberg terminal. first bloomberg's relationship with private sector clients, wall street and the bank.

second bloomberg's relationship, ubiquitous, in the halls of government. third, how this story affects the short, medium and long term and whether the company is doing enough to address clients' concerns. the fed, treasury are reporting the ecb are looking into the tracking of top officials and they're interested among other things that bloomberg violated, customer agreements. cnbc reporting that former employees acknowledged seeing data from fed chairman ben bernanke and former secretary tim geithner and paul o'neal. bloomberg saying reporters did not have access to trading or portfolio data, indeed playing down the kind of access that they had. there is a report that alan greenspan, the former fed chairman and his help desk was reviewed by employees, another data that he knew in 2011. it is unclear what changes if any, bloomberg might have made. did bloomberg alter his policy

and that was policy ignored or was there more info potentially available? how much additional disclosure about all of these things bloomberg has to make can be determined by the markets. how much more would the clients demand to know about the access of reporters. david? >> thanks very much, steve. for that we want to bring in jonathan corpino and matt. you used bloomberg. so this morning when you looked at your terminal and started it up. did you have second thoughts? you know what? i think with the information society and the information age that we're in, anything can be deemed this way. it's not a sur poise. it's an unfortunate circumstance when they had such a great platform for information sources that everyone usees and it does give you pause, but i don't think it will stop anyone in the long run because there's no alternative right now. so you don't see yourself

changing your behavior at all? >> i don't think so. >> i used it for informational sources only. i don't have a portfolio or anything that anyone will try to take for me. i'm not worried about it from that regard and i don't think it will change anything from my end from a trading standpoint. >> we have multiple systems throughout my company there and in talking to clients this morning i think there is a little bit of apprehension that's there because clients who do have portfolios that are on bloomberg and trade through there, who is seeing what? so yes, you know someone is looking at something and is it compliance or regulatory? if someone is looking at this information against you to their advantage and that's when the real breach comes into play. >> i thought you said something extraordinary there. you kind of waft into it and in the information age in which we live, you have to expect anybody is watching what you do. this isn't facebook or google. this is a secure trade in platform.

surely, you shouldn't need to be that relaxed about it and this is a completely different part of the i.t. network that bee use. >> the information has to be to go through one central data point to get the information sources. so it's going through. someone's got to see it, whether it's a tech and whether there's someone selling the information and someone sees it at all times and that's the way i feel about the internet and i don't do anything online for that reason. >> google has engineers. there's not a newsroom at google that is trying to generate content on your business at the same time, right? that is something different in this case. >> it certainly is. there are bad seeds in every company that they could be doing certain things. i look at it in that regard and maybe i'm naive in that aspect where i'm taking the best of both worlds here. >> let me ask you about the central bankers and for years we grew up and why is flash saying the bank of japan was checking rates and they were about to intervene and now you have the ecb having to explain what it's doing. just the mere fact that you know that they are checking rates

possible toe intervene. that's market-moving news. that's very, very viable, isn't it? >> absolutely. you see a trend and pattern of stories and certain rates that are being looked at. >> you can trade on it and take it real simple. you look at a company or a hedge fund or private equity fund and if they're looking at one particular stock and history and components that are there, you can assume a plus b equals c. that's where the real problem lies here. >> all right. we'll see where the story goes. do you think this thing has legs, guys? just your take on it. >> unfortunately, ink this is the tip of the iceberg. we've got two parties that are here saying i did this, i did not do this. i think we need independent outside counsel to start looking that the so to see what information is there and if they can start drawing lines away from the middle network that was there. >> i just don't know what becomes of it. it will have legs and it will take a while to solve it, but where does it go from here. what other alternatives are you

going have for your informational sources. >> it's reasonable to restrict it so the positions the hedge funds have are not evident across the organization by the reporters which is possibly where they are here because the reporters don't have access to certain information, correct? >> there's a lot to the story, so, but you know, are you trading on this information? this is a one-time deal so that goes back to the practices that we're going to see. if one time is enough, maybe this is a major story. >> thank you for your time. >> meantime, reports surfacing that the scrutiny over the irs and the targeting of conservative groups may be far broader than originally proposed. could that have anything to do with the wealthy? we'll do a deeper dive on that next. mine was earned in djibouti, africa. 2004. vietnam in 1972.

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>> it is the >> it is the sensation that is burning up the web and no, we're not talking about the latest grumpy cat clip or justin bieber. we are talking about numbers. it is cnbc's now web show that gives you the trade behind the hottest charts pitting the fundamentals with the technicals with some of the biggest names of the street. here to tell us more is the host of "talking numbers" brian sullivan. the prompter said brain sullivan. you want to call me that? that's sort of appropriate. >> we have a brain on set. >> that's mine, man. don't go taking that one, sullivan. >> they call me defunct liver. >> or spleen. >> guys, thank you. it's a cool thing, guys because in the world of television you guys are live and everything happens and there's a limited amount of real estate that you want to get across. "talking numbers" is cool and this is a partnership with them and cnbc where we are going do three-to-five minute segments and we'll dig in from different stock story from technicals and

fundamentals. we will push back on either and we'll have some debates and we'll get into companies a little more than maybe the real estate of traditionaal, live television allows us to because you know how it works and you guys can plan to talk about apple and something will break and pretty soon you throw the scripts in the garbage. we'll be doing stock stories every day and it will be highly educational. it will be a lot of fun and not sure if i'll be as tan as in the promo. i was pretty tan in china. >> you mentioned in apple where a lot of times, brian, charts are all you have left because the fundamental analysis is so -- it's all over the map and who knows what the futures will bring with a company like that? >> i'm learning a lot as we go along, too, right? technical analysis is a language unto itself, right? i know you guys know, we all know the rudimentary technicals and that's a double top or head and shoulders. we'll dig a little deeper and it

will be highly educational and i've been reading text books so i can communicate with the guests that we have on and it is also going to be approachable and it's not like we'll be speaking some language like italian math ma tigs and we'll dig into that and the fundamentals and we'll take viewer suggestions on what to talk about. so at sully@cnbc at the twitter handle and if you have stocks you want to dig into, and shoot me a tweet. >> is that a good pickup line? shoot me a tweet. >> come around here often? >> shoot me a tweet. we'll go through the names and you have dennis gartman on today and mark farber on and we'll have an opportunity to do some things that the unusual real estate of live television does not -- plus, if i screw up we can start over because it's tape. >> very nice. >> no sweat. >> you will be insufferable around the office talking about candlesticks.

>> have you seen them? i saw them in coachella, the bollinger bands and they opened for mark kelly. >> be sure to log on and catch "talking numbers" because dennis gartman will talk about gold. all that and a lot more. go to cnbc.com/talking-numbers. the discovery that the irs unfairly targeted conservative political groups is growing. some on capitol hill are calling now for a congressional investigation. let's bring in concerns next's chief washington correspondent john harwood. this is a big story, john. >> reporter: it is, simon. republicans are calling for a congressional investigation and so are some democrats. i think you can expect president obama when he comes out at his news conference in a few minutes here at the white house to voice similar sentiments because this is something that is not good

for his administration, not good for the credibility of the executive branch and darryl issa was on "meet the press" yesterday talking about it is aing there are definite reforms that need to be enacted to prevent it from happening again. here's darryl issa. >> this is something that you have to institute changes to make sure it doesn't happen again. there has to be accountability for the people who did it and quite frankly, up until a now days ago, there has to be accountability for people telling lies about it being done. >> that's one of the things that i think you can expect republicans to focus and president obama to address. the irs denied in congressional testimony in 2012 that this was taking place and then just on friday inexplicably at a conference in answer to a question acknowledged that in fact, it had taken place. all of the issues surrounding how broad it was, who knew about it and when they knew about it and why it wasn't disclosed earlier are going to come out eventually and process will help

that process along, simon. >> thank you very much, we'll watch with interest. beyond certain political groups could the irs have others in the crosshairs namely the wealthy? wealth reporter robert frank has more as he always does. >> the data is very clear. if you are wealthy you are far more likely to be audited. the overall audit rate in america is about 1%. that's actually down from previous years, but if you make $200,000 or more, you are three times more likely than the rest of the population to be audited. people making 1 million or more they are the biggest targets and 12.5% are audited and the irs has created a special group called the global high wealth group to focus those with high incomes. conservatives argue this is further proof that the irs is unfairly targeting the wealthy. president has said repeatedly that the wealthy don't pay their fair share. targeting the top end cree the

eights, quote, tax cheats galore on the lower end. the irs and tax experts say there are no politics here just simple economics. the wealthy are far more likely to have business income and business income has the most errors. the wealthy has the most money. audits are designed to generate additional tax dollars and the wealthy pay and avoid the largest tax amounts. the irs found $4.8 billion from auditing those million dollar returns and an average of $117,000 per return. so very lucrative. if the irs is following any ideology it's sutton's, you go where the money is. back to you guys. >> or whether value judgments are being made on the deductions. a lot of them are judgment calls. people on low incomes don't have so many deductions. >> that's right. there's a whole screen process that looks for deductions and for your types of income. it looks for things that aren't recorded on a computer where they have of maitching document

to document that wealth and a lot of complexity and the wealthy had the most deductions and the most complexity in their return. it's the algorithms that are making these judgments. >> thank you very much for that. rick santelli certainly has thoughts on the irs and how agency goes about its duties. he's going to file with us next on "squawk on the street." h, he. since aflac is helping with his expenses while he can't work,

welcome back to "squawk on the street." first santelli exchange of the week. you talk about a weekend really since thursday, just boatloads of important stories we're all supposed to be in tune with. the first one is easy. you know, it's easier to connect the dots now. john hilsenrath story really in many ways all of this hitting at the same time the dollar/yen went through 100. i thought it was odd that such a move would have such big repercussions on rising rates here. it seems as though that story with regard when the exit is was true. but i go back to all the experiments we've already had with exit strategies before it was the purchase program, it was interest rates or positions on widening holdings.

no matter how you slice it, we can knock this one off. the easy answer is, talking about a door and using a door are two different things. as far as the bloomberg story. there are so many levels of issues here, i will tell you, you know, many of the producers at cnbc wanted me to do my job and i did. talk to people that use bloombergs. and jim cramer, myself have come from lives where it was in to grow in the business. many people are still enamored with the emotion that it's a great wealth of historic information. this story is is disturbing but i don't want to deal in circumstantial evidence. i think that the irs story to me really hits home. let's put a couple of quotes on the screen to get into this the way i get into this. some very famous leg minds. first is oliver wednesdayle holmes, for my part i think it is less evil that some criminals should escape than the government should play an ignomo part. or william blackstone. better that ten guilty persons escape than one innocent suffer. why are these appropriate?

because these questions are really a truth to power question. most of america are good. they're people that do good things. unfortunately when you are good you assume everybody is good. that isn't the case. the issue is where it's the irs or benghazi. it's very much the same. it's truth to power that we cannot assume because somebody says they're fair and honest as a politician or the fact that this is a day and age of information, of cameras, of databank, of profiles. there's people at your bank that call you up and try to sell you productses because they know you have extra cash laying around. everybody is getting into your information. but the government is different. i personally think benghazi and the irs story will change health care. they will change obamacare. why? because it's one thing to have all your receipts and be called on the carpet to hassle, and prove you're innocent. it's not thing like seinfeld when you walk in line and you

need that stint and they say, no stint for you because you back this group, you have these thoughts, you live in this area. this is going to change the involvement of government and the irs enforcement originally designed in obamacare. that's my thought for the day. carl, back to you. >> we're going to find out in a little bit here, rick, potentially if the president takes a question on the story. thanks very much, rick santelli. we are just minutes away from obama's news conference with the british prime minister, david cameron. we'll bring it to you live as soon as it brings. first, bill gates, if you missed, this getting emotional about the memory of his friend and rival steve jobs.

microsoft founder bill gates emotionally recounting his relationship with steve jobs in a "60 minutes" interview with charlie rose. take a listen. >> i got to go down and spend time with him. >> you talked about what? >> oh, about what we learned, about families, anything. he and i, in a sense, grew up together. every fantasy we had about creating products and learning new things, you know, we achieve

all of it. >> gates offered a colorful anecdote about jobs canceling on him for dinner due to his illness. >> he said to my secretary, if he wants to know why, just tell him i'm an [ bleep ]. he was sick but it was kind of classic. saying, okay, i'm not going to give you any reason, but i'm canceling. >> that's amazing. especially those two guys having basically grown up together. >> over the years, it wasn't plain sailing as the isakson book details. >> fascinating. david, see you later? >> you will. >> simon, see you later. this is what you missed earlier on. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> i don't think there's anything wrong with trying to collect usage data, but i do think there's something wrong if you don't disclose that first and get the permission of those

whose data you're collecting. >> i think there are still opportunities underlooked and overlooked on companies. we're still finding good companies at good prices. >> this has to end. this is done. this is rolling over. it's finished. how do you find anybody in these anecdotal situations who said to me, you know what, maybe it keeps going higher. maybe i'm complete paranoid. you put it in, you put it in e-mail, you should expect it to be on the front page. >> or certainly being read in china. >> the chinese, i've text, i text my kids and i know that they know that she goes to tulane. >> there's the opening bell. >> they need to be really, really transparent on the arc of the story, what the policy is going forward and how they can, you know, red flag the use of any unusual information on the news division. >> while there may be a few

people who have personal gripes against mr. dimon, we certainly don't. i don't understand that position. really it's more of a structural risk control part of the board in separation of these two powers. good monday morning. we are live at "post 9" at the new york stock exchange with the check of the markets. mondays have not been generally good for the dow this year. again, having a trouble getting the week off to a start. down 36 points. cyclicals among the big losers. s&p down 2 1/2, nasdaq is down 1. tesla continues the climb higher. rising 8%. reporting the first ever report. first three-month period ofs positive cash flow from operations last week. young brands falling more than 2% as the fast food company says its sales in china fell 2% last month. let's get the road map.

controversy that has the street buzzing. bloomberg reportering admitting using data terminals to spy on clients. plus, technology experiencing the comeback as the nasdaq hits new high after new high. look at the technicals of the rally and find out what might be in store. finally, could tech giant going have a weak spot? it's at a new high today for the seventh straight session. we'll talk about the company's innovation and whether it's too much of a good thing. but the drama does continue at jpmorgan. first up, chairman and ceo jamie dim dimon. she's been following this story and has the latest for us this morning. >> that vote next tuesday in tampa seems to be approaching in slow motion. still a week away and yet the drum beat continues. the focus now on dimon's future at the bank, if shareholders vote in principle for that nonbinding proposal that the chairman and ce ourselves roles be split. wall street reporting as you mentioned, that dimon told

investors that one option if the vote succeeds is his departure. dimon told investors taking a strict approach on the matter is silly but that as ceo he was interested in maintaining both roles. there could be another looming argument for the case for both roles. at pet present, the only feasible independent chairman would be lee raymond, the exxonmobil f exxonmobil. there's a problem, at 74 raymond is past the retirement age in the board's by laws and when he tried to retire previously the board unanimously voted him in for one more term. dimon would like to assume that chairman role once his successor takes the reins as ceo and seeding the role now would make it more difficult to rea point it later on. the options are being discussed for however the vote goes next tuesday. carl? >> look your ticket to tampa.

that's what everybody is doing. >> it's booked. >> thanks, kayla. i want to get back to the story that has wall street buzzing this morning. of course, it's the controversial privacy breach involving bloomberg data terminals as the company under scrutiny today. for more, i want to bring in a pair of journalists covering the story since it broke. tom lowery here at cnbc. we should note he was an employee of bloomberg for three months following the company's acquisition of business week and amy is a correspondent for "new york times." guys, it's good to have both of you. good morning. >> thanks. >> tom, cramer was on this morning and makes the argument that nobody is going to cancel their subscription or terminal as a result of all this. so what do you think is on the line for the company at this point? >> i think its reputation on the journalism side. the question will be did they push too hard, were the parameters set up for how aggressive a reporter should go after a story. >> any color you can provide having worked there before? were you ever in a position to

leverage your ability to see when a user did or did not logon? >> i did t not. i was there a short amount of time. i will say this news on friday does nothing to dispel the notion that the company is operated as a big brother culture. you were able, for example, employees who left the office would have to swipe their id badge and that -- the time and departure could be seen by every departure across the globe and when they swipe back in. it did nothing but create a culture of paranoia within the company. >> amy, you've covered this comprehensive for "the times." i wonder where you think the story is, if this is going to be a short arc or if -- i mean, we had tony fratto on earlier this morning who said they need to bring in a third party and start bringing in heavy duty forensics on this or this goes on for a long time. >> you're right. we also have to look at wall street. there's a shutter through wall street on this. yes, bloomberg has a monopoly and where else are they going to do but you don't want love lost

between the big investment banks. at the end of the day the terminal business drives this company. it is not the news organization. the news reporters were from the inception of their operation as a way to sell more terminals. >> as we said -- sorry, carl. >> tom, go ahead. >> as we said over the weekend, a lot of banks are re-examining their contracts. we happen to have a team of a standard service agreement. it's boilerplate. there's nothing in there that would put a client at ease that there's a strict chinese wall in place. i think that gets reworked going forward. >> you might expect a facebook or apple to invade your privacy but they're paying 20 grand a year for the terminals. i think with the expectation that proprietary trading information is private. >> yeah. but i mean, do you agree with the notion that there is is no other place to go to get data sliced and diced that way? is it more about demanding better terms when your lease is up? >> yeah. absolutely not. the first person i heard when

this scandal broke was from reuters saying, you know, we keep a firm line between our rorps and our desktop products. so i think there's definitely people, you know, dow jones is trying to get into the same type of business. it's a lucrative business and there are others who will seize on this if they can. >> tom, this morning we had tony fratto on who said when he was a treasury, it always seemed like a bloomberg reporter was the one who knew when they were going to nominate someone on a monday morning and it drove him crazy. i wonder how this journalism organization, which has a reputation for aggressiveness, right, good, aggressive coverage, making it with a lot of scoops, if those scoops in the future now are going to be called into question. >> i believe so, unless they put some measures in place. there's this sort of doctrine they have called the bloomberg way. i'm sure that gets amended to put some strict control on this going forward. >> amy, how about you? what gets said at the table there when they're in their meetings today? >> it's interesting that he mentioned the bloomberg way because matt winkler, the editor

and chief of bloomberg news who wrote that handbook to journalism came out today with an editorial saying this was a common practice dating back from the creation of the newsroom. i do think they have to remind people they aren't doing it anymore or re-enforce that trust. >> yeah. it's amazing. you can almost understand how it might have been pitched in the early days when it was a small business, but clearly it's 7, $8 billion business now and things have to operate differently. amy, tom, thank you so much for your time. >> thanks, carl. >> thanks. when we come back, the nasdaq hitting a 12-year high for the 11th straight session. so, what are these levels saying about what's ahead for the index? we're going to go to the charts and get technical with bay wolf in a moment. but first, rick santelli has your own take on the markets. rick? >> everybody is talking about this stories of the day, everybody. that washarris. we have andy brenner coming up. let's talk to him about the

hilsenrath story. will bernanke be in the job in the first quarter of next year? that and everything you always wanted to know, tune in, ten minutes, be there.

blooking at a live shot of the east room at the white house where the president and david cameron will give a joint press conference in a few moments. when it starts live we will bring it to you as it happens. in the meantime, after a lagging

in the market last year tech is making a comeback. nasdaq hitting a new 12-year high for 11 sessions in a row. want to check the charts. mark newton is the chief technical analyst at gray wolf execution partnerses and joins us here at the telestrator. so nasdaq, bullish, bearish? >> it's certainly been bullish. the risk is not near as much as it been in the last couple of years. here's a chart that goes back since the '09 lows. the prices have just entered this area that really marks the highs of this uptrend channel. though there are quite a few positives with regard to money now flowing out of the defensives and some of the divergence is limited. the russell is a new high, transport is new highs. this is not the best risk award necessarily for the nasdaq co composite on an absolute basis. >> you felt better when people were still in the defenses when we talked about this being a defensive rally. >> back in november. market has rallied a good deal

since then. we have seen a couple of encouraging things with regard to sector rotation and now we're moving into technology and into energy, those do seem to be sectors that i think are better risk reward than maybe reach for financials and industrials. >> speaking of the move into technology, we're all -- our heads are still spinning as to what's happening to microsoft over the past couple or three weeks. >> this is a prime example of looks for stocks just starting to emerge from bases not necessarily over bout. this is a stock that just moved to new multi-year highs. we've moved above highs present back in april and in the past year in january of this year. and so this is really an interesting stock as it's starting to gain momentum. my thinking is the stock can get up as high as $38. it looks like a much better risk reward. >> really? there's been a lot of discussion about you could have bout microsoft recently and gotten the lion's share of the gains for the last ten years.

>> that's exactly right. >> what makes you more confident about $38 now as opposed to before? >> the fact we sconsolidated, tested high, pulled back and broken the highs to the upside. that means the stock is not only if you look at the longer term momentum gauge, starting to turn positive on a weekly and monthly basis, the stock is up at the highs but the stock is not near all-time highs. good momentum but yet gradually in a base, makes it, in my opinion, technically, a better risk reward. >> interesting. facebook, your have a chart on that, too. >> yes, facebook is also a similar boat as microsoft and the stock lost 50% or so from the ipo price. as we're approaching this anniversary, we rallied almost all of the way back to the prior highs here now we held right at this 50% retracement level. so this is more of a mildly bullish scenario. gradually starting to form a base. my thinking is this is also constructive. getting above $32 would make the

stock start to accelerate back to the ipo highs. for the time being it's a good risk reward with lows near $25 providing probably decent support and upside getting above 28 likely sends it to 32 and potentially much higher. so in this kind of market there's a lot of stocks obviously moved well, starting to lose no mmissourno shais no . >> suggesting around the $8, maybe it was $26.08 is where institution alibiing really gets triggered, but certainly it's been more of a slow build for facebook than anything real dramatic. >> technically, you are starting to show a few more promising signs here as the stock has pulled back, but it's funny a lot of people are mentioning this coincide with the technical level. you will see people reach to buy breakouts and oftentimes that can lead to acceleration which i think is what can happen.

>> overall, the first chart, you would say -- i'm trying to put words in your markouth now. market is stretched, market is slightly overbought? >> it is a little overbought. it's the high as the level of in 2007. that doesn't mean you run out and sell right away. momentum is not really followed this move to new highs. we have new concerns about sentiment being ramped up on this move and entered seasonally the most bearish time in this year, may through october. so, you know, my thinking is that you have to be invested to some extent but i favor technology, energy, and really i personally expect ai peak in th next couple of months. late spring and peaks out, pulling back in september or october provide a much better opportunity to buy. potentially we could be near the peak of this entire rally since 2009. it's important to wait and see the weakness. it can't just immediately sell and be out of the market for

good. you have to address this. >> good inside. mark newton at gray wolf. when we come back, google has everything from laptops to cellphones to wearable technology. stock cannot be stopped. record high for seven straight sessions now. is there a weak spot? we're going to find out when "squawk on the street" comes back. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.

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let's get over to -- actually, a live shot over to the east room as we await the president and british prime minister david cameron. when that begins, i will bring it to you live. in the meantime, let's send it to over josh lipton for a "mark flash." >> watching google reaching a new all-time hyatt 882.47. that stock has sent a new record for seven straight sessions. why positive vibe? analysts say core performance has been strong. android per forring well. shift from apple. google glass has people talking. also have the big developer conference this week. stocks basically flat right now.

up about 24% so far in 2013. carl, back to you. >> josh, stick with me for a moment. i want to get your take on this, too. keeping a close eye on blackberry, which is up only about 2 1/3 to $15.90. we're told on heavy volume, looking back at my notes for recent research on blackberry. there's been discussion not just on the zin ten in canada but the q-10 as well, the device with the actual physical keyboard making the entry in north america. there's been concerns about supply, making enough of them to meet demand even as it in some -- according to some research at least, begins to wean in popularly. as we all await a competing device from apple. but we are seeing some heavy volume on blackberry jobs. just want to point that out. it's up 36 cents. bell is about to sound across europe. we'll bet that in a few moments. still waiting for the president

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the president was expected about 11:15 this morning. we're told now just a few minutes away. take you to the east room at the white house where he's going to make a joint appearance with the prime minister of the uk, david cameron. and john harwood, apparently take one question from our side, one question from their de. >> we're not going to get much

chance to talk to him, carl, but it's an important moment for the president. this is somebody who is counted throughout his presidency on the fact that even for people who disapprove of his policies, he's benefited from a pretty high regard for his personal characteristic, his character, who he is, his honesty, that sort of thing. and benghazi and irs, you've g two issues that both have the potential to have ordinary people look at these and say, wait a minute, maybe these guys don't shoot quite as straight as we thought they did. that's something i think the president is certainly going to be called on to address today. the other issue, the more important issue in a diplomatic international sense from his meeting with cameron, of course, is going to be what to do about syria in light of the growing evidence that chemical weapons were used in that conflict across the red line that the president had articulated before. but i think it is quite likely that the question the president gets from whatever american reporter he calls on are going to be about the irs and benghazi. >> already today marco rubio in

what was a well-timed letter from his standpoint calling for the resignation of the irs commissioner steven miller. and a lot written today about the natural tempo of second terms and why we seem to always run into investigations in the latter half of a presidency. is there anything more to it than that, john? >> well, both of the things that we're talking about, the ben xwaz ghazi attack and the aftermath is in the second term. it's not about what happens in the second term but the second term gives more time for things to come out, gives more time for a t president's political adversaries to investigate and talk about them and so, you know, part of it is simply the scars that you accumulate by virtue of being president for a long period of time. >> what is the feeling, john, among those who watch the white house closely about the legs that the irs -- specifically the irs story has and what could he say today to potentially

ameliorate that? >> the irs story will have legs if anybody can establish that people in the white house knew about or condoned that activity. from what we know on the record so far, it was something within the irs and, remember, the irs was headed during that time by a bush appointee. somebody with a five-year term who served across republican and democratic administration. if somebody can establish that it was condoned, tolerated, known about for a long period of time within the white house and not disclosed because one of the issues is why did it come out on friday, then the president has a more serious problem. >> these are policies to make sure that despite some earlier reports to the contrary, did originate within the agency itself, right? these are irs -- essentially an irs framework that was developed to target some of these organizations. >> from everything that we know so far, tarts r that's correct, carl, although that's part of what the inspector general will

determine and whatever investigations begin on capitol hill are also going to look at. >> you mentioned syria. and that game changer line that red line comment that continues to come back to haunt him, he did try to address this, john, in the last press conference with the american media a couple weeks ago. how much more ground is there to plow? >> well, the president is, of course, moving very cautiously because if you say that you're drawing a red line and then it gets crossed, you've got to do something. what to do is the problem, the question, the dilemma facing the administration. it's something that i'm sure he talked about with david cameron. certainly the united states is now become well aware and everybody in foreign policy in the united states has become well aware of the dangers and difficulties of what happens when you intervene in a country in a serious way. you own that for and the problems associated with it for a long time. so i think the president is being very deliberate but i don't think he's got any choice but to do something. and we will -- we can expect to

see over a period of days and perhaps weeks the president deciding and then letting the rest of us know what that something is. >> yes. of course. and then there will be comments from the prime minister, as well, talking about the relationship with the eu. something he has recently described as unacceptable. we await the two of them at the lecturn. with the dow doen, i want to turn to mary thompson. >> the dow has been stuck in a narrow range today, about 60 points. down 41 now. slightly off the lows of the day. it's been a broad-based decline. we're seeing a stall in the record rally that we have seen. one of the reasons is the disappointing data on china on the industrial production side. right now a little bit of strength in the reits. also, banking stocks getting a boost. structure is highish. here are some of the sectors actually the retail sector, we also want to note under pressure

despite better than expected retail sales. materials under pressure because of that industrial production data from china. weaker than expected. along with the fact that anglo gold also came out with weaker than expected results. that's putting pressure on the gold miners today. utilities and telecom also weak. we are seeing strength in health care because of gains in drug stocks and biotech is looking strong in today's session. disney, we've been talking about google hitting an all-time high. disney hitting an all-time high as well. up 35% for the year, making it the second best performing stock in the dow industrials. the best performing stock among the dow 30s is hewlett-packard which has gained an impressive 50% so far in 2013. a number of companies also coming out with their earnings. let's run through some of the storied stocks today if retailer joseph a. banks lower after the forecasting, coming in with disappointing number because of weak sales and lower prices.

post holdings coming out with weak numbers because of higher input costs. this is a cereal maker. pressuring its stock. mosaic coming out and saying that it's going to be delaying an expansion or production in one of the canada plants. this is a fertilizer company. stock is down on that. young brands, as expected, said that its china sales were down 29%. right now is dow is off 40 points. it looks right now like that record run could be in jeopardy today. >> thank you very much. simon is here watching the close in europe. g-7 wrapping up and more. >> absolutely. down from the five-year highs today. europe also in negative territory. down at the bottom right, just look at how greece has rallied today in the green. we are watching the finance minister's meeting over in brussels. they are expected to okay money for broet cypress and greece, and, of course, deal with that speculation as to whether or not moving forward, big depositors are going to have to be bailed

in to any bailout. the greek stocks are doing well. check out the banks today. article in the ft that is pointing out the degree to which some big u.s. hedge fund managers thinks these stocks or at least the warrants on them are a one-way bet. very interesting read. look at the national bank of greece, over the last month, see the degree to which it has rocketed. there you go. up 76%. that's one that might be national nationalized. don't get the wrong impression with the stock market as buoyant in europe. the atmosphere is still very bad. fitch, the ratings agency, surveyed investors that are controlling somewhere in the region of $12 trillion. and over 50% still believe that it's going to get worse there before it gets better. either that this is short-lived momentum of calm or that markets are irrationally exuberant. one last set i want to show you, the airlines are trading lower in europe today. we have a second case of the

sars like virus emerging in france. probably from saudi. air france is down 4 1/2%. back to you, carl. >> our senior economics reporter steve liesman back from his coverage of the g-7 meeting in london and exclusive with the treasury secretary. joining us with a look at how the europeans received secretary lew. welcome home. >> carl, thanks very much. the treasury secretary jack lew appeal for more stimulus in europe is getting a better reception than the one received by his press seder. in a cnbc exclusive on friday lew explained why that might have been the case. >> i think the fact that the u.s. economy is performing much better is something that they've noticed. i think the fact the academic literature has been evolving a little bit is something that the world has noticed. the reality is for a global recovery to go where it needs to go, it can't be led by the united states alone. >> that's a big theme for lew.

one of the most interesting, if unclear outcomes is what you probably call the gamble on japan and the yen, losing to flash, i'll call it a yellow policy to stimulate its economy. warning them it could go too far and repeating the g-7 policy that it's okay to stimulate the domestic economy. not okay to do so by expressly ve devaluing the economy. a weaker yen makes u.s. exports less competitive compared the japanese exports. the strategy seems to be to not complain about it but monitor the impacts carefully. among them, positive change in japanese asset prices and wages. japanese officials publicly jawboning for higher wages. structural reform of the japanese economy and rising inflation expectations. those will be the things u.s. officials likely look for. lew's gamble for the moment is the u.s. economy is strong enough to withstand whatever

negative impacts come from a stronger dollar against the yen and not much political fallout from exporters and congress. it's that the longer term the u.s. economy will benefit from a turn around in japan. what's the level of this tolerance, carl? is it 110, 120, or even 125 will be content to still flash that yellow signal, carl? >> it's funny you mention that. dennis sent out a long-term chart in the early '80s above 200 and arguing 125 in the long-term scheme of things isn't that far away. >> a lot depends on the domestic economic situation and to an extent by extension the domestic political situation. if the u.s. economy is still putting up 2 1/2, 3%, if exports are going to go okay, and if it doesn't look -- feel like the japanese are in here selling goods on the cheap. and by the way, there's one thing to watch, carl, sympathetic valuations. other countries in asia, for example, may devalue while they

watch the japanese because they don't want to become uncompetitive relative to the japanese. >> steve, great stuff. great to have you home. steve liesman back at hq, let's check in with rick santelli. what a day friday was. >> yeah. it started in many ways thursday, carl. that's where i'm going to hit my guest andrew brenner with. andrew, welcome again. i remember thursday when everything seemed to hit about the same time i heard rumors about the potential hilsenrath story. that was about the same time we saw the dollar/yen moving through 100. it was very difficult both of us being market forensics, so to speak, to decide. in hindsight, i'll ask you two things. your general thoughts about fid exit or are they measuring the door, going to use it, but "b," more importantly,would you agree that that rumor probably planted the seeds of the sell-off and it became a life of its own?

your thoughts. >> absolutely. as far as question number two, there is no question in my mind that rumor had some substance even though we didn't see the article until probably friday evening but it was obvious the market traded off all day friday. as far as the fed exit and their strategy, there's no question that the market is very nervous about a fed exit. we are definitely in a bubble now and all fixed income markets whether it's treasuries, whether it's high grade, whether it's high yield, whether it's european sov wrens, referrals. we're definitely in a bubble but we could stay in a bubble for white a while. >> the last part, yeah. let me interrupt you a minute. to me, the early days of quantitative easing and the early days of weakness in the global economy that the idea of a shortage of high quality collateral still rings as a phrase in my brain i will never forget. i find it ironic that there's global forces at work to do some of that buying of treasuries and

boons and jgbs just on its own without the fed. okay. switch gears. you pointed out something i thought it was terrific in your blog today. not in your entire existence as the federal ever graduated to the top seat when the chairman has moved on. expand on that, will you? >> well, you know, we looked -- we had an argument internally as well as a another cnbc guest maybe a month or so ago and we looked to see if any vice chairman had ever risen to the post of chairman. since the fed has been around in 1913, literally 100 years, there has never been a vice chairmans that risen to the post of chairman. i don't think yellen, even though today's "wall street journa journal"'s front page says yellen is the choice. i don't think it is at all. i think it's more than likely going to be larry summers. >> i just want to hear you say it one more time. >> larry summers. lawrence summers. >> i'll tell you what, to me,

you know, when we look at presidential candidates it's about you not only have positive readings, negative readings. i think there's people out there that are screaming right now. andrew, thanks for being our guest. carl, back to you. >> thank you very much, rick santelli. you were looking at the door in the east room where the president and the british prime minister are expected to come out any moment here. again, the discussion expected to likely center on the relationship of course between the u.s. and the uk, but it is essentially been taken over. the mind share, at least, today, the targeting by the irs, clearly the investigation into the benghazi. two topics we covered in jon harwood in the last few minutes. with the limited questioning, one from the u.s. side, one from the uk side, there's really not room for any other issues to crowd out that agenda. >> that's right. although i think this may be the kind of news conference for which ten-part questions were invented when you only t get one

question per side. you're going to see a lot of people trying to probe many areas. >> yes. >> here's the president. >> there is the president and the prime minister. >> have a seat. to all our moms out there, i hope you had a wonderful mother's day. it's always a great pleasure to welcome my friend and partner, prime minister david cameron. michelle and i have wonderful memories from which david and samantha visited us last year. there was a lot of attention about how i took david to march madness. we went to ohio. and a year later we had to confess that david still does not understand basketball. i still do not understand cricket. as we said before, the great alliance between the united states and united kingdom is rooted in shared interests and shared values. and it's indispensable to global security and prosperity. but as we've seen again recently, it's also a

partnership of the heart. here in the united states we joined our british friends in mourning the passing of barrenness margaret thatcher, a great champion of freedom and liberty and of the alliance that we carry on today. and after the bombings in boston, we americans were grateful for the support from friends from around the world, particularly those across the atlantic. at the london marathon runners paused in a moment of silence and dedicated their race to boston and david will be visiting boston to pay tribute to the victims and first responders. so, david, i want to thank you and the british people for reminding us that in good times and in bad, our two people stand as one. david is here, first a and foremost, as he prepares to host the g-8 next month. i appreciate him updating me on the agenda as it takes shape and we discussed how the summit will be another opportunity to sustain the global economic recovery with a focus on growth and creating jobs for our people. michelle and i are looking

forward to visiting northern ireland and i know that the summit is going to be a great success under david's fine leadership. we discussed the importance of moving ahead with the eu towards negotiations on the trans atlantic trade and investment partnership. our extensive trade with the uk is central to our broader trans atlantic economic relationship which supports more than 13 million jobs. i want to thank david for his strong support on building on those ties. i look forward to launching negotiations with the eu in the coming months. i believe we've got a real opportunity to qatcut tariff, o markets, make all of our economies even more competitive. with regard to global security. we reviewed progress in afghanistan where our troops continue to serve with extraordinary courage alongside each other and i want to commend david for his efforts to encourage greater dialogue between afghanistan and pakistan, which is critical to regional security.

as planned, afghan forces will take the lead for security across the country soon, this spring. u.s., british, and coalition forces will move into a support role. our troops will continue to come home and the war will end by the end of nek year, even as we work with our afghan partners to make sure that afghanistan is never again a haven for terrorists who would attack our nations. given our shared commitment to middle east peace, i updated david on secretary kerry's efforts with israelis and palestinians with an importance to moving toward negotiations and reaffirmed our support for democratic transitions in the middle east and north africa, including the economic reforms that have to go along with political reforms. of course we discussed syria and the appalling violence being inflicted on the syrian people. together we're going to continue our efforts to increase pressure on the assad regime, to provide humanitarian aid to the long-suffering syrian people, to

streng strengthen the modern opposition and prepare for a democratic syria without bashar assad. that includes bringing together representatives of the regime and the opposition in geneva in the coming weeks to agree on a transitional body which would allow a transfer of power from assad to this governing body. meanwhile, we'll continue to work to establish the facts around the use of chemical weapons in syria and those facts will help guide our next steps. we discussed iran or we agreed to keep up the pressure on tehran for its continued failure to a3w50bide by nuclear organizations, in order to resolve the world's concerns about its nuclear program. finally, today we're reaffirming our commitment to global development. specifically we're encouraged by the ambitious reforms under way at the global fund to fight

aids, tb and malaria wihere bot of our nations are stepping up efforts. david made it clear that the g-8 summit is another way to make it clear for knewticiannutrition. as we consider the challenges we face around the world, it's clear we face a demanding agenda but if the history of our people show anything, it is that we perseve persevere, as one of the london runners said at the marathon, we're going to keep running and we're going to keep on doing this. that's the spirit of confidence and resolve that we will continue to draw upon as we work together to meet these challenges. david, thank you very much. and welcome. >> thank you very much, barack. thank you for the warm welcome. it's great to be back here with you in the white house. thank you for what you said about margaret thatcher. it was a pleasure to welcome so many americans to her remarkable funeral in the uk. i absolutely echo what you said

about the appalling outrage in boston. i look forward to going there to pay my tribute to the people of that remarkable city and their courage. we will always stand with you in the fight against terrorism. thank you for the remarks about the cricket and the basketball. i haven't made much progress. i made a bit of bro progress on baseball. i actually read a book about it this year. maybe next time we will work on that one. it's good to be back for the first time since the american people returned you to office. and as you said, the relationship between britain and united states is a partnership without parallel. day in, day out across the world our diplomats and intelligence agencies work together, our soldiers serve together, and our businesses trade with each other. in afghanistan, our armed forces are together defending the stability that will make us all safer. and in the global economic race, our businesses are doing more than $17 billion of trade across the atlantic every month of

every year. and in a changing world, our nations share a resolve to stand up for democracy, for enterprise, and for freedom. we discussed many issues today as the president has said. let me highlight three. the economy, the g-8, and syria. our greatest challenge is to secure a sustainable economic recovery. each of us has to find the right solutions at home for all of us it means dealing with debt, it means restoring stability, get ourg economy growing, and together seizing new opportunities to grow our economies. president obama and i have both championed a free trade deal between the european union and united states. and there's real chance now to get the process launched in time for the g-8. so the next five weeks are crucial to realize the huge benefits this deal could bring will take ambition and political will. that means everything on the table, even the difficulty issues, and no exceptions. it's worth the effort for britain alone an ambitious deal

could be worth up to 10 billion pounds a year. we discussed the g-8 summit in some detail. when we meets on the shores in northern ireland five weeks from today, i want us to agree ambitious action for economic growth. open trade is at the heart of this but we have a broader agenda, too, to make sure everyone shares in the benefits of this great openness. not just in our advanced economies but in the developing world, too. i'm often ashamedly pro-business politician, but was aopen up our economies to get business growing we need to make sure that all companies pay their taxes properly and enable citizens to hold their governments and businesses to account. today we agree to tackle the tax evasion, we need to know who owns a company, who profits from it, and whether taxes are paid. and we need to track where multi-nationals make their money and where they pay their taxes so we can stop those who are manipulating the system unfairly.

finally, we discussed the brutal conflict in syria. 80,000 dead, 5 million people forced from their homes. syria's history is being written in the blood of her people, and it is happening on our watch. the world urgently needs towatc. the world urgency leads to come together to bring the killing to an end. none of us have any interest in seeing more lives lost, in seeing chemical weapons used or extremist violence spreading even further. so we welcome president putin's effort to achieve a political solution. the challenges remain formidable. but we have an urgent window of opportunity before the worst fears are realized. there is no more urgent international task than this. we need to get syrians to the table to agree a transitional government that can win the consent of all the syrian people. but there will be no political progress unless the opposition is able to withstand the onslaught and put pressure. so we will also increase our

efforts to support and to shape the moderate opposition. britain is pushing for more flexibility in the eu arms embargo and we will double full support to the syrian opposition in the coming year. armored vehicles, body armor and power generators are about to be shipped. we're helping local councils govern the area they liberate and dealing with the influx of refugees. we'll also do more for those in desperate humanitarian need, helping torture victims to recover, getting syrian families drinking clean water, having access to food to shelter. there is now, i believe, common ground between the u.s., uk, russia, and many others that whatever our differences, we have the same aim, a stable, inclusive, and peaceful syria free from the scourge of extr e extremi extremism. we now need to get on and do everything we can to make it happen. thank you once again for your warm welcome and our talks again

today. >> we've got time for a couple of questions. we're going to start with julie pace. >> thank you, mr. president, i wanted to ask about the irs and benghazi. when did you first learn that the irs was targeting conservative political groups? do you feel that the irs has betrayed the public's trust? and what do you think the repercussions for these actions should be? and on benghazi, newly public e-mails show the white house and the state department appear to have been more involved with the crafting of the talking points than first acknowledged. do you think the white house misled the public about the role in shaping the talking points? and do you standby your assertions that the talking points were not changed. and prime minister cameron, on syria. if the eu arms embargo is amended or lapses, is it your intention to send the syrian opposition forces weapons or are you encouraging president obama to take the same step? thank you. >> let me take the irs situation first.

i first learned about it from the same news reports i think most people learned about this. i think it was on friday. and this is pretty straightforward. if, in fact, irs personnel engaged in the kind of practices that have been reported on and were intentionally targeting conservative groups, that's outrageous. . and there's no place for it. and they have to be held fully accountable because the irs as an independent agency requires absolute integrity and people have to have confidence that they're applying in a nonpartisan way, applying the laws in a nonpartisan way. and you should feel that way regardless of party. i don't care whether you're a

democrat, independent, or republican. at some point they're going to be a republican administrations, at some point there'll be democratic ones. either way, you don't want the irs ever being perceived to be biased and anything less than neutral in terms of how they operate. so this is something that i think people are properly concerned about. the ig is conducting its investigation. and i am not going to comment on their specific findings prematurely. but i can tell you that if you've got the irs operating in anything less than a neutral and nonpartisan way, then that is outrageous, it is contrary to our traditions and people have to be hold accountable and it's got to be fixed. so we'll wait and see what exactly all the details and the facts are. but i've got no patience with it. i will not tolerate it, and we

will make sure that we find out exactly what happened on this. with respect to benghazi. we've now seen this argument that's been made by some folks primarily up on capitol hill for months now. and i've just got to say, here's what we know. americans die in benghazi. what we also know is clearly they were not in a position where they were adequately protected. the day after it happened, i acknowledged that this was an act of terrorism. and what i pledged to the american people was that we would find out what happened, we would make sure that it did not happen again and we would make sure that we held accountable

those who had perpetrated this terrible crime. and that's exactly what we've been trying to do. and over the last several months, there was a review board headed by two distinguished americans, mike mullen and tom pickering who investigated every element of this. and what they discovered was some pretty harsh judgments in terms of how we had worked to protect consulates and embassies around the world. they gave us a whole series of recommendations. those recommendations are being implemented as we speak. the whole issue of this -- of talking points, frankly throughout this process has been a side show. what we have been very clear about throughout was that immediately after this event happened, we were not clear who

exactly had carried it out, how it had been -- how it had occurred, what the motivations were. it happened at the same time as we had seen attacks on u.s. embassies in cairo as a consequence of this. and nobody understood exactly what was taking place during the course of those first few days. and the e-mails that you allude to were provided by us to congressional committees. they reviewed them several months ago. concluded that, in fact, there was nothing afoul in terms of the process we had used. and suddenly, three days ago, this gets spun up as if there's something new to the story. there's no there there. these so-called talking points

that were prepared for susan rice, five, six days after the event occurred pretty much matched the assessments i was receiving at that time in my presidential daily briefing. and keep in mind that two to three days after susan rice appeared on the sunday shows using these talking points which had been the source of all this controversy, i sent up the head of our national counter terrorism center matt olson up to capitol hill and specifically said it was an act of terrorism and that extremist elements had been involved in it. so if this was some effort on our part to try to down play what had happened or tamp it down, that would be a pretty odd

thing that three days later we end up putting out all the information that, in fact, has now served as the basis for everybody recognizing that this was a terrorist attack and that it may have included elements that were planned by extremists inside libya. who executes some sort of cover-up or effort to tamp things down for three days. so the whole thing defies logic. and the fact that this keeps on getting turned out, frankly, has a lot to do with political motivations. we've had folks who have challenged hillary clinton's integrity, susan rice's integrity, mike mullen and tom pickering's integrity. it's a given that mine gets challenged by these same folks. they've used it for fund raising and, frankly, you know, if

anybody out there wants to actually focus on how we make sure something like this does not happen again, i am happy to get their advice and information and counsel. but the fact of the matter is, these four americans as i said right when it happened, were people i sent into the field. and i've been very clear taking responsibility for the fact we were not able to prevent their deaths. and we are doing everything we can to make sure we prevent it in part because there are still diplomats around the world who are in very dangerous, difficult situations. and we don't have time to be playing these kinds of political games here in washington. we should be focused on what are we doing to protect them. and that's not easy, by the way. it's going to require resources and tough judgments and tough calls. and there are a whole bunch of diplomats out there who know ey